Star Citizen - Chris Roberts, lots of spaceship porn, lots of promises

Right. But as I said above, we already know it’s Squadron 42, and Ortwin (partner) already confirmed it. He also confirmed that Star Citizen was “excluded”. Which is what this furor is about. How can Star Citizen be excluded, if it’s assets and tech are used in Squadron 42?

I am, sorry.

Is your belief that since SQ42 is dependent upon Star citizen, that the collateral must include star citizen, otherwise the collateral would be worthless? And that is a problem?

I’m not trying to put words in your mouth, I’m just trying to understand what you are saying.

Yes.

Point being, whether it was intentional (to mislead the bank by giving them SQ42, while excluding SC) or not (inadvertently including some Star Citizen claims by virtue of the broad collateral in SQ42), there is argument as to whether or not the bank could very well have a claim to Star Citizen.

As I mentioned earlier today (and in my blog update), none of this will matter if they don’t default on the loan, or go bust before they pay it off.

Well, I believe that there is no suggestion made that the collateral would include an actual functional game (insert joke about how even star citizen isn’t a functional game here, heyooo!). Part of this would depend upon how the term “game” is actually defined in the terms, but we do not have access to that, and so it would be pure speculation.

However, I know from experience that there is not necessarily an assumption that deliverables (or in this case, collateral) imply complete and independently operable works. I’ve personally worked on contracts which specifically did not include required dependencies, ultimately resulting in the recipient needing to pay license fees for the portions which were developed separately from their project.

In this case, if you removed star citizen, SQ42 definitely would not function as a playable game, but this does not mean that it would have no value. Things like musical scores, art assets, etc. which are specific to the SQ42 game could still potentially have value. Certainly not the value of a complete game, but you wouldn’t really expect such value for a fairly small loan.

And since this loan is against expected tax payments, (akin to accounts receivable from a customer who is guaranteed to pay), the only real risk for the bank is that the payments would come under the expected amount. But the bank could establish pretty easily how likely that is, and could decide that risk is low. They are still going to get paid some large portion of their money back, in that the payment from the government itself is the prime collateral.

So, worst case for the bank, they get paid what the government is estimated to pay F42, plus whatever value they can squeeze out of the collateral, which is likely not huge. That seems like a reasonable move for the bank, assuming they did their due diligence and F42’s financial records looked good.

So I guess, to me, the notion that the collateral presented is not a functional game, is not in fact a problem. It’s what I would expect.

Indeed, it’s kind of what most of the folks here also would expect, which is why it’s prompting questions like, “why on Earth would they mortgage their entire work for a few million pounds?!” I think the answer is, they didn’t.

To be fair, the loss of the collateral would actually be far more of an incentive for F42 to make the payments, than is value in the hands of others. It has more value to F42 than it does to anyone else.

Again though, without terms of the loan, it’s hard to know for sure, and I’m certainly not a lawyer. I respect your view and experiences as different from mine.

If you’ve ever set eyes on a video game contract, you should know that the definition of “Game” is just the name of the game. Nothing more. Nothing less. And the Charge description already has a clear indication of what that is.

There is no ambiguity about what “Game” is. If it were defined differently, it would have been in the charge. It’s not. Why? Because it’s defined in the loan docs; and Section 4 is what determines the rest.

It’s not rocket science really.

Nobody is, or has ever, disputed this. It’s in the Charge docs, clear as day.

Wrong. The tax credits are one item in the collateral. If CIG fail to to qualify for the tax credit, or they get less - due to spending less - they are still on the hook for the loan payment. There is a lot of risk in the tax credit not being enough to pay back the bank, or the studio going out of business before they are even entitled to it. So the bank secured everything else to safe guard against that.

Wrong. That’s why the bank carefully carved out specific assets in Section 4, and listed them. e.g. the audio would have value in sales or licensing as a tangible asset, unlike a game source code that would require extensive work in order to exploit/extract value.

Except, according to the bank - and the Charge (which you are continuing to ignore) they did. Says so right there in 3 pages of Section 4. Plus they lost controlling interest in their own assets. See Section 5.

Yes. But that’s the thing with collateral. They’re as safe and valuable as your ability and intent to pay the loan that preserves them. Until you can’t.

No it’s not. There’s nothing missing in the Charge that would be immaterial to the loan docs because by UK law, it has to be accurate. Look it up. A charge doc is just a “memorialized list” of the “material assets” in a loan doc. Again, if you have ever seen what a software - or any contract - looks like, then you would know the difference between a short form (e.g. Letter Of Intent) and a long form (final contract) contract.

Yep, in Venn Diagram form, this is how I see it:

SQ42 is made from portions of SC, is made from portions of Lumberyard. (Assets, scores, scripts, IP, source code, mo-cap, video, etc, etc, etc)

CIG don’t have rights to transfer the Lumberyard engine itself, so we are talking about the overlap of the blue and green parts - purple.

I agree with Derek in that the contract is worded in such a way that the purple component could easily be under dispute if CIG defaults. Or, maybe the bank knows the dependency SQ has on SC and that purple is excluded, significantly reducing the value of what’s left of SQ42, which explains additional securities in the charges.

Either way, if a default occurs, the bank is going to want to value from it’s security and if they don’t think they can get it from the carcass of SQ42 once SC is removed, I can easily see them disputing.

Again, perhaps CIG will service this with nary a drama, but good business people don’t really take unnecessary risks and that’s what this seems like to me, for what is supposed to be an operational loan against future tax credits and some FX hedging.

I guess they could dispute it, but given the pretty clear section excluding ALL intellectual property related to star citizen, it seems like they would be virtually guaranteed to lose such a complaint.

So, there is apparently a difference of opinion on how that works be interpreted by a court, but in every legal contract I’ve dealt with, language like that means ask creative works on that project. Which, for a software company, is essentially 100% of what they produce.

But it’s just my opinion, and I’m no judge.

Good diagram, by the way.

The question, to my mind, is whether the bank know how deeply dependent SQ42 is on SC. If they know, happy days, no drama, default means SQ42 is dead, CIG lose some other UK assets but otherwise continue on and SC is unaffected. (Note this would still be disastrous for CIG ,IMO).

If they don’t know, or have not been informed, or CIG have omitted how dependent they are and how much cross-over there is, then the bank would have a good case for the contract being negotiated in bad faith by CIG. That could be very bad, as to my knowledge the UK courts, to various extents, still value the faith under which contracts are negotiated, rather than the strict legal text. Who knows what the fallout of that could be.

Either way, no default = no problems. Probably.

This is possible, but potentially hard to prove.

Ultimately, Derek is right in that all of this is likely to be moot, given the size of the loan and the money they are pulling in. I suspect they’ll pay it off and we won’t hear about it again.

If not, drama either way, because as you say, losing SQ42, would still be a massive loss for CIG. Its value to them is huge. They spent serious money getting folks like oldeman to act in it, and that would definitely be lost no matter how you read the contract.

Any sources for that, or are you back to stating truisms?

Software in and of itself is never intellectual property. Novel software processes can be patented, but the patent is the IP and not the software that uses it. Copyright can be asserted, but copyright only covers the literal expression of the software and making enough changes to the software defeats copyright law.

Google search results are replete with examples of IP being sold off without said IP including copyright of previous software/games/movies/books. In media, IP is generally regarded as being branding rights as the processes to create said IP over time are generally worthless. Indeed, authors often sell off copyright while holding onto IP rights, as more software developers are starting to do.

If you like, you can read the links that Derek posted there, about how Software is usually protected as intellectual property.

What I’m saying here isn’t really a controversial topic. I suspect every software developer here protects their work as intellectual property.

“Intellectual property rights” is defined in the deed and includes among many, many things, copyright in software. No need to speculate or follow random links.

How much is this loan, isn’t the tax credit payment the loan payer??

That’s the thing- no one knows how much the loan is for (except the bank and RSI, of course). So it naturally becomes the perfect opportunity to spread more FUD.

Love that Venn. It completely illustrates the issue which many (who aren’t game devs) either aren’t grasping, or are willfully ignoring. Good job.

As you concurred, the bottom line is that if they don’t default, or go bust (which triggers a default), there is no concern. But for a company reported to be on financial shaky ground, for a project that is at least +3 years away, what could possibly go wrong?

The question, to my mind, is whether the bank know how deeply dependent SQ42 is on SC. If they know, happy days, no drama, default means SQ42 is dead, CIG lose some other UK assets but otherwise continue on and SC is unaffected. (Note this would still be disastrous for CIG ,IMO).

If they don’t know, or have not been informed, or CIG have omitted how dependent they are and how much cross-over there is, then the bank would have a good case for the contract being negotiated in bad faith by CIG. That could be very bad, as to my knowledge the UK courts, to various extents, still value the faith under which contracts are negotiated, rather than the strict legal text. Who knows what the fallout of that could be.

Either way, no default = no problems. Probably.

That’s basically the crux of the matter. What does the bank know and/or expect, based on what CIG/F42 told him in order to get this loan.

LOL!! uhm, yeah, no.

Right. Which is why you shouldn’t be saying things like “virtually guaranteed to lose such a complaint

ps: You don’t need to be a judge for that. It’s the attorneys and jury who get to make the case.

People is not skeptic because they are haters. People is skeptic because every Korean MMO is a grinder. Every Anime has flashy teenage skin and fanservice. And every Pyramidal scheme ends with the owner escaping in a helicopter.

We see red flags and we react to these red flags. I think everyone, even the sketics, would be happy if this has a happy ending.

The following article is off-topic.

For Stars theres the opposite of “Too big to fail” theres a “So big, the failure is going to be epic!”. And thats the Chandrasekhar limit.

sigh

How so?

[quote]Ultimately, Derek is right in that all of this is likely to be moot, given the size of the loan and the money they are pulling in. I suspect they’ll pay it off and we won’t hear about it again.
[/quote]

What information do you have about the size of the loan? Please share it. ktnx

If they had money to pay off a loan, why would they take out a loan with such collateral. And if they have cash reserves, why not pledge that for a loan instead? After all the 1st NatWest loan actually has their income bank account as a collateral.

What information do you have as to the value of SQ42? Please share it. ktnx

Too late. I tried explaining that to him; complete with links. He basically just ignore them, even as he seemed to agree, while parroting the same nonsensical diatribe that warranted the cited sources in the first place.

It’s a losing battle tbh.

We don’t know. Ortwin’s statement implies offers NO insight; only waffle words. e.g.

“Coutt’s security for our UK Tax Rebate advance”
“to obtain a regular advance against this rebate”
“This security does not affect our UK companies’ ownership and control of their assets”
“and even then the UK companies have ample assets to repay the loan, even in such an eventuality which is of course unthinkable”

For all intent and purposes, it could be for this year’s tax credit, next year, a number of years etc. Nobody knows.

That’s assuming he is telling the truth and that the loan was only toward a tax credit. It could possibly be just a loan, but for which the tax credits only form a part of the collateral. Which would actually explain the list of collateral the bank asked for.